Magazine article National Defense

Readers' Forum

Magazine article National Defense

Readers' Forum

Article excerpt

Technical Data Rights

In reference to your editorial, "DoD Clashes With Suppliers Over Data Rights," (Jan. 2014), in most cases the data rights/IP issue is focused upon commercial offthe-shelf, or COTS, items. In the product support of these COTS items is where things can get ugly regarding field service technician manuals, the tasks to be performed for a reparable part, embedded software changes/upgrades and much more. I have pondered developing a solution for this issue. In my commercial and defense work, I have often had to contend with this area of conflict between end-user/nonmanufacturing providers and the originial equipment manufacturers and distributors.

Why not create a financial instrument - traded within a special financial exchange - that would monetize the IP not only for contractors, but also for Defense Department IP? The financial instrument would be constructed as a right to employ the IP, which could include multiple tranches of use, such as one for parts manufacturing or another for algorithms. The value of the IP would be based upon the net reset value of the IP. For instance, IP that would be employed to support the line maintenance of 300 aircraft currently fielded, with an expected remaining Ufe of 20 years would have a greater price than that for the same aircraft that had only 10 years remaining.

What is interesting is that the Defense Department could turn the tables on contractors by having the contractors "pay their fair share" for work done by such groups as the Defense Advanced Research Projects Agency through the exchange.

This financial exchange would be created with a special status by Congress in order to control exports and other issues.

The Defense Department currently has an estimated weapon system inventory worth $1.5 trillion. An estimated 20 percent of it entails products with manufacturer-owned IP, and IP constitutes an estimated 10 percent of the value of those products. Product support annual expenditures average about 7 percent, or $21 bilUon a year for COTS items. IP could be monetized, through the exchanges, over a 10-year period. Thus if the non-manufacturer acquires the right to the IP, they would have to build a business case in which they could still generate a profit, if they incurred the additional cost of acquiring the rights to the IP.

Selling the rights of Defense Department IP could be a source of income for the Materiel Life Cycle Commands. Imagine the monetary value of IP that the government has given to contractors that was never employed in a fielded weapon system. We are talking billions of dollars. Some of that could be recovered via this IP financial exchange that would be available for commercial organizations.

In a fully functioning financial exchange, $5 billion to $10 billion of IP rights could be exchanged each year. Market forces would drive a solution that is a win for the government and for contractors.

Ron Giuntini

Giuntini & Co.

No Shortage of Defense Engineers

Concerning "Defense Executives: Shortage of Engineers Is Not a Myth" (National Defense Blog Nov. 27, 2013), the key point mentioned in your article is that "U.S. defense executives are pushing back on suggestions that a shortage of science, math and engineering graduates is a fake crisis."

The article says a deficit of STEM skilled workers has been the "conventional wisdom in Washington for years, but a crop of studies in recent months has poured cold water on the notion, embraced by defense industry, that a dearth of engineering talent poses a threat to U. …

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